The three men that put Britain back into recession, laugh and joke.
In this section I will look at different news stories relating to what and how the new government will cut fronm us all. But hey what do we expect you voted for them (I didn't).
Budget key points: At-a-glance
Here are the key points of Chancellor George Osborne's first Budget, delivered on 22 June, 2010:
TAX
VAT: Rate will rise from 17.5% to 20% from January 4, 2011.
Personal income tax allowance: To be increased by £1,000 in April to £7,475 - worth £170 a year to basic rate taxpayers. It is expected that 880,000 of the lowest-paid will be taken out of income tax altogether.
Council tax: Could be frozen for one year from April 2011 in England, but extra funds will only be offered to councils which keep their own costs down. Worth about £35 per household.
Capital Gains Tax: To rise from 18% to 28% from midnight for higher rate taxpayers. The "entrepreneurs relief" rate of 10% on the first £2m of gains will be extended to the first £5m.
A 50p a month "landline tax" to fund the rollout of fast broadband will be scrapped - instead the government will support private investment, partly funded by the digital switchover under-spend within the TV licence fee.
The balance of spending cuts to tax rises would be 77% to 23%.
CIGARETTES, ALCOHOL AND FUEL
No increases this time round. Labour's plan to increase the duty on cider by 10% above inflation will be scrapped from July.
BENEFITS
Child benefit: Frozen for the next three years.
Tax credits: Reduced for families earning over £40,000 next year. But low income families will get more Child Tax Credit - the amount per child will rise by £150 above the rate of inflation next year - at an annual cost of £2bn.
Housing benefit: New maximum limit of £400 a week for properties with more than three bedrooms, £250 a week for a one-bedroom flat, £290 for a two-bedroom property and £340 for a three-bed property, to save £1.8bn a year by the end of the Parliament.
Unemployed people will see their Housing Benefit cut by 10%, after 12 months of claiming Jobseekers Allowance from April 2013.
It will also be cut for people of working age who are in larger homes than their family size warrants but, from April 2011, disabled claimants who do not have a resident carer will be able to claim for an extra bedroom.
Health in pregnancy grant to be abolished from April 2011, the Sure Start maternity grant will be restricted to the first child.
Lone parents will be expected to look for work when their youngest child goes to school.
Excluding the state pension and pension credit, from 2011 benefits, tax credits and public service pensions will rise in line with the Consumer Price Index, rather than the, generally higher, Retail Price Index, saving over £6 billion a year by the end of the Parliament.
The government will introduce a medical assessment for Disability Living Allowance from 2013 for new and existing claimants.
The welfare shake-up will save £11bn by 2014/15.
PUBLIC SECTOR PAY
Public sector workers face a two-year pay freeze if they earn over £21,000. Those earning less £21,000 will get a flat pay-rise worth £250 in both years.
Armed services personnel in Afghanistan will see their operational allowance doubled to £4,800 - as announced by David Cameron two weeks ago.
PENSIONS
The basic state pension will be linked to earnings from April 2011, with the pension guaranteed to rise in line with earnings, prices or 2.5%, whichever is the greater.
The government will accelerate the increase in state pension age to 66 - a "call for evidence" will be made later this week.
The government will also consult on phasing out the default retirement age - to ensure those who want to work past 65 are able to do so.
Former Labour Work and Pensions Secretary John Hutton to review public sector pensions, ahead of the autumn spending review.
BUSINESS
From April 2011, the threshold at which employers start to pay National Insurance will rise by the rate of inflation plus £21 per week.
Corporation Tax will be cut next year to 27%, and by 1% annually for the next three years, until it reaches 24%.
The small companies' tax rate will be cut to 20%.
Tax relief for the video games industry will be scrapped.
BANKS
A bank levy will be introduced, which will apply to the balance sheets of UK banks and building societies and the UK operations of foreign banks from January 2011. But smaller banks will not have to pay. It is expected to raise over £2bn a year.
ENVIRONMENT
The government will "explore changes to the aviation tax system" such as switching from a per-passenger to a per-plane levy. It will consult on major changes.
Government looking at reforming the climate change levy "to provide more certainty and support to the carbon price". Proposals to be published in the autumn.
The Office for Budget Responsibility will assess the effect of oil price fluctuations on the public finances over the summer, before the government looks at options for a "fair fuel stabiliser" - which would see fuel duty fall when prices go up, and vice versa.
Case for rural fuel duty discount is under consideration.
REGIONS
White Paper to be published on tackling regional economic differences in Britain later in the summer, followed by a paper on rebalancing the economy of Northern Ireland.
The upgrade of the Tyne and Wear Metro, extension of the Manchester Metrolink, redevelopment of Birmingham New Street station and improvements to the rail lines to Sheffield and between Liverpool and Leeds will go ahead.
A Regional Growth Fund will be created to help fund regional capital projects over two years.
People setting up new businesses outside London, the South East and the east of England will be exempt from £5,000 of National Insurance payments for the first 10 workers.
UK ECONOMY
Growth forecast revised down from 2.6% to 2.3% in 2011.
The economy is predicted to grow by 1.2 % this year, 2.3% next year, 2.8% in 2012, 2.9% in 2013 and 2.7% in both 2014 and in 2015.
Debt to peak in 2013/14 at 70% of GDP.
Unemployment is forecast to peak this year at 8.1% and then fall for each of the next four years, to reach 6.1% in 2015.
Consumer price inflation is expected to reach 2.7% by the end of 2010 before "returning to target in the medium term". The inflation target remains at 2%, as measured by the Consumer Prices Index.
The UK is set to miss the previous government's "golden rule" - of borrowing only to invest over the economic cycle - in the current cycle by £485bn.
BORROWING
Underlying current budget deficit should be "in balance" by 2015/16.
Public sector net borrowing will be £149bn this year, £116bn next year, £89bn in 2012-13 and £60bn in 2013-14.
By 2014-15 borrowing to reach £37bn, falling to £20bn in 2015-16.
SPENDING
Mr Osborne said the state now accounted for "almost half" of all national income which was "completely unsustainable".
Average real terms budget cuts of 25% over four years - except for health and international aid. Departmental cuts amount to £17bn by 2014-15.
But current expenditure to rise from £637bn in 2010-11 to £711bn in 2015-16 - partly due to rising debt interest payments.
No further reductions in capital spending totals but there will be "careful choices" about how the money was spent. Projects with "a significant economic return to the country" would be prioritised.
Sourced from The BBC
FULL BUDGET DOCUMENTS
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Documents hosted by Direct.gov.uk
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Emergency action needed before Osborne's emergency Budget
Should you hastily sell off assets or rush out to buy a TV to beat the taxman? Simon Read investigates the likely impact of changes expected to capital gains, pensions and VAT
New Chancellor George Osborne is itching for next Tuesday. He'll be announcing his first Budget and, rather grandly, has termed it an emergency Budget. There have been plenty of indications and leaks about what he will be proposing, not least with regard to increasing capital gains tax. But does the prospect of cutbacks and tax increases mean you should move fast and make changes to your personal finances now?
Yes, says independent financial adviser Martin Bamford of Informed Choice. "The most urgent priority is making pension contributions, if you are a higher rate taxpayer and had planned to make contributions at some point during this tax year anyway," he says. "There is a high probability that higher rate income tax relief on pension contributions will be abolished or scaled back even further in the Budget, so making these contributions now makes real sense."
The existing system of tax relief for pension contributions was shaken up by the last government's plans to cut the amount of relief given to high earners. The coalition Government is unlikely to scrap the plans – which are due to come into force next April – but may revise them to reduce their perceived complexity.
"In the interests of simplification and saving revenue, it is possible that the Government will repeal the complex rules that are due to take effect from 2011/12 onwards," says Lisa Macpherson, national director of tax at PKF Accountants. "The pensions industry and many others are suggesting cutting the annual limit for qualifying contributions, from the current £255,000 level to perhaps £50,000. At this lower level, giving tax relief at the individual's highest rate, even if that is 50 per cent, would cost the Government less than giving only basic rate relief on a contribution of £255,000."
There has been widespread media coverage about an expected increase in capital gains tax, but should that be a concern? Not to most taxpayers, according to TUC general secretary Brendan Barber. "The vast majority of taxpayers never come into contact with capital gains tax as they are simply not wealthy enough to buy and sell the assets that bring capital gains," he says. "CGT is the tax dodger's tax of choice and is used by the wealthy to pay less tax. If the Chancellor is serious about us all being in this together, he should implement in full the Liberal Democrat proposals on CGT."
In short, the Lib Dems hoped to increase capital gains tax to the same rate as income tax. So higher-rate taxpayers would pay 40 per cent CGT. It does seem likely that the Chancellor will adopt the measure in some form, despite a concerted campaign by the financial services industry and high earners to persuade the new Government to scrap the idea. But it was less than three years ago that CGT was charged at 40 per cent, so a return to that level should not come as a shock.
The people who should be concerned about the expected rise are private investors, second home owners and entrepreneurs with several assets. The question for those taxpayers who may be affected by the potential higher rates is whether they should act now, and realise assets at the current 18 per cent that capital gains tax is charged at.
"Until we get the details in the Budget on 22 June it's all speculation," says David Kilshaw, head of private client advisory at KPMG. "But we would urge anyone considering disposals before then to seek advice as soon as possible."
However, he warns that there could be risks in taking action before next Tuesday. "These include that tax may be paid earlier than if no action had been taken; that the tax liability may have been lower if action had been deferred until 22 June 2010; and that the desired tax result may not be achieved because new legislation makes it ineffective," Kilshaw says. "So it's important to decide whether to take action in the light of these risks."
Martin Bamford also advises people to do nothing right now. "We are not advising our clients to realise capital gains," he says. "While we expect to see the rate of CGT increased in line with income tax rates and the annual exemption reduced, there is a good chance this will apply from the start of this tax year. This could mean those investors who have rushed to dispose of assets will face a hefty tax bill," says Bamford. "You should never let the tax tail wag the investment dog, so selling investments quickly is a foolish strategy."
Having more immediate impact on us all could be an increase in VAT. The widespread view is that it could rise to 20 per cent, and could be introduced as soon as next weekend. "It would be a massive surprise if there was no announcement of a significant VAT uplift on Budget day," says Stephen Herring, senior tax partner at accountants BDO. "On current projections VAT is anticipated to bring in £78bn for 2010-11 and a rise to 20 per cent could add up to a further £11bn. Given that the Chancellor is unlikely to have an opportunity to raise VAT again this parliament, he may be tempted to raise the rate even higher with a promise to reduce it once the deficit is under control," he warns.
On that basis is it an idea to rush forward major purchases to save the potential extra 2.5 per cent of tax? It's an extra £2.50 on every £100 you spend on VAT-able items so if you've been delaying buying that £1,000 HD TV, it could make sense buying it now to potentially save £25. On the other hand, speeding to the shops to rush to buy something that you haven't researched properly could mean paying over the odds in your haste.
In other words, making snap decisions based on changes that might or might not happen could be a costly mistake. "The most important thing ahead of any Budget is to understand your personal financial situation and have a clear plan," says Bamford.
And if you really want to buy an HD TV, read Martin Hickman's Consuming Issues column.
*Increasing VAT from its 17.5 per cent rate to 20 per cent in Tuesday's Budget could trigger a sharp rise in inflation, potentially putting the recovery at risk, warn accountants UHY Hacker Young.
A jump in VAT could mean high-street prices climbing by more than 2 per cent as retailers are likely to pass on the increase to consumers. But higher VAT won't just mean higher prices, it could hit businesses and lead to another recession.
"A VAT hike could push up prices on the high street by around 2 per cent, which would have a very significant impact on inflation," says Simon Newark, VAT partner at UHY Hacker Young. "Higher inflation could trigger interest rate rises, risking the spectre of the 'double-dip' recession."
He predicts that a VAT increase will exacerbate cashflow problems for businesses and could also reduce the capacity of banks to lend. For businesses which cannot reclaim VAT such as banks, it will directly hit their bottom line. Given the weak state of the banking sector and the ongoing reluctance of banks to lend to small companies, a VAT hike could further reduce lending to the small business sector."
Even businesses which can reclaim VAT will suffer. Higher VAT will eat into cashflow, which could push some businesses into insolvency, Newark warns. He says charities will also suffer as a raise in VAT will add to their costs and reduce the funds for charitable projects.
But with the Government needing to reduce the deficit, raising VAT to 20 per cent would bring in between £11bn and £12 bn a year. For that reason, and for political expediency, the anticipated rise in VAT is likely to become a certainty on Tuesday, says Newark. "The Chancellor realistically only has once chance to get away with it by blaming the previous administration, and that is now," he says.
sourced from: The Independent
In Full: The projects axed or suspended by government
Here is the list of funding for projects agreed to by the Labour government since January 2010 which have been axed, or suspended by the Conservative/Liberal Democrat coalition government
The full list of projects agreed since 1 Jan now being cancelled:
Stonehenge Visitor Centre: £25m
Plans aimed to improve the setting of the prehistoric monument, with a new centre located further from the stones, the nearby A344 closed and a new transport system to drop visitors off. Stonehenge £25m centre plans axed
Local Authority Leader Boards £16m
Created in the last weeks of the Labour government to replace regional assemblies, made up of English council leaders with powers over areas like transport and housing. The government says their powers will be given to councils.
Sheffield Forgemasters International Limited: £80m
The Labour government had extended the engineering firm an £80m loan for a 15,000 tonne press to supply specialist components for the nuclear industry. Company's nuclear parts loan axed
Rollout of the Future Jobs Fund: £290m
A fund to support job creation for young people who were long-term unemployed which aimed to create 150,000 jobs. Councils, charities and social enterprises were encouraged to bid for a share of the money.
Six month offer recruitment subsidies: £30m
For people on Jobseekers Allowance for six months - it included new short-term training places, recruitment subsidies for firms employing them and more support for people to start up a business.
Extension of Young Person's Guarantee to 2011/12: £450m
The scheme aimed to provide work or training places, mainly for 18 to 24-year-olds who had been out of work for six months - some linked to the Future Jobs Fund.
Two year Jobseeker's Guarantee: £515m
Aimed at giving jobseekers a guaranteed offer of a job, internship, volunteering placement or work experience after two years of being out of work.
Active Challenge Routes - Walk England: £2m
Department of Health project to map walking routes and promote them on an interactive website so people can record their fitness.
County Sports Partnerships: £6m
Aimed at helping people access and benefit from sport - 49 across England. They also make sure local facilities are being put to best use.
North Tees and Hartlepool hospital: £450m
New hospital at Wynyard Park, on Teesside to replace existing hospital in Hartlepool and Stockton-on-Tees Hospital plans axed by government
Local Authority Business Growth Initiative: £50m
Aimed at encouraging councils to help local businesses grow by rewarding them with a grant that was not ringfenced.
Outukumpu: £13m
Project to buy and develop a Sheffield site into an industrial park.
List of projects suspended:
A14 road: £1.1bn
There had been plans to widen the road between Cambridge and Huntingdon to six lanes. Proposal to improve A14 suspended
Libraries Modernisation Programme: £12m
Plan to reverse decline in library usage, to offer flexible opening hours, free internet access and entitlement to membership from birth. Film centre loses government cash
Sheffield Retail Quarter: £12m
Retail and leisure development in central Sheffield consisting of about 100 new shops and 200 apartments.
Kent Thameside Strategic Transport Programme: £23m
Improving road junctions and bus transit schemes on the A2 to accompany major residential housing and commercial office development.
University Enterprise Capital Fund: £25m
Funding to help university departments translate ideas into commercial ventures.
Newton Scholarships: £25m
Initiative to identify, assist and retain 100 of the best research students at UK universities.
Health Research Support Initiative: £73m
Service to help medical researchers understand trends in patient data to support clinical trials and other studies.
Leeds Holt Park Well-being Centre: £50m
Plan for a "community hub" in Leeds including a new swimming pool and learner pool, meeting areas, a community café, activity rooms and consulting rooms.
Birmingham Magistrates Court: £94m
Proposal to build a state-of-the-art new court building in the centre of Birmingham.
Successor Deterrent Extension to Concept Phase Long Lead Items: £66m
Purchase of hardware for design phase of successor to Trident nuclear missile system - to be reviewed as part of the broader Trident "value for money" review.
Search and Rescue Helicopters: £4.6bn
Private Finance Initiative (PFI) funded deal for a new generation of search and rescue helicopters to be jointly operated by the Ministry of Defence and the Ministry of Transport. They will be reviewed "as a matter of urgency".
Child tax credits to be slashed for anyone earning over £30,000
Millions of families are set to lose payouts of more than £500-a-year as the coalition takes the axe to child tax credits, Nick Clegg signalled today.
Next week's Budget will move to slash the payments for middle earners, the Deputy Prime Minister indicated.
Mr Clegg attacked the expansion of the handouts under Labour and insisted it was not 'unreasonable' to reduce them for better off families.
The payments are now received by nine out of 10 families and are going to many parents 'who don't really need it', he said.
It is understood the move will affect anyone earning more than £30,000 - meaning millions of families will lose out.
Next weeks' emergency Budget is set to contain savage cuts and possible tax hikes as the coalition looks to make its first steps toward paying down the huge deficit.
The new Government has vowed to cut back on welfare handouts to help reduce the £155billion budget deficit as well as to fund income tax reductions.
Next weeks' emergency Budget is set to contain savage cuts and possible tax hikes as the coalition looks to make its first steps toward paying down the huge deficit.
The new Government has vowed to cut back on welfare handouts to help reduce the £155billion budget deficit as well as to fund income tax reductions.
The Conservatives had wanted to reduce child tax credits for families with an income over £50,000-a-year.
But he has been forced to go further in order to strike a compromise with the Liberal Democrats, who wanted them slashed for families on incomes as low as £25,000.
Mr Clegg said today: 'Surely, everyone agrees that having tax credits extended, which is basically a means-tested benefit, to nine out of 10 of every family in this country which has got children means you are giving a lot of money - taxpayers' money, other people's money - to people who don't really need it.
'We want to taper them away from those families who have much more money than others. I do not think that is an unreasonable way to go.
'I don't think it is right to simply say that because we have inherited the old system you can't make that money better targeted at people and children who are really in need.'
Tax credits were a flagship policy for Labour, masterminded by Gordon Brown, and were supposed to target the poorest households.
But new figures revealed this week how they have led to £3.1billion every year - 13 per cent of total payments - going to people on above average incomes.
Child tax credit is currently received by all parents with a household income of up to £58,000 or £66,000 if the child is under the age of one.
It can be worth up to £2,850-a-year for someone with one child and is paid out until the child turns 16.
The size of the payments depends on how many hours parents work, if they pay for childcare and how many children they look after.
For incomes of around £40,000, they are worth £545-a-year.
Asked about claims the Government could also mean-test child benefit, Mr Clegg insisted: 'We are not looking at that at all.'
He refused to rule out the measure being in next week's crucial financial statement by the Chancellor.
'The worst thing I can do before the Budget is start trying to second guess this detail or that detail,' he said.
Families on middle incomes stand to recoup some of the money lost because income tax thresholds are due to be hiked.
Sourced from The Daily Mail - you got the Tory Government you wanted, so why start moaning.
Government shelves Labour projects worth £10.5bn
Coalition cuts £2bn in projects, including £80m loan to Sheffield Forgemasters, and suspends others valued at £8.5bn
The government has cancelled or frozen £10.5bn worth of projects announced in the dying days of the Labour government.
An £80m investment to build parts for nuclear power stations in Sheffield and the flagship Labour policy of free swimming for children and pensioners will be scrapped while work on new libraries, hospitals, job schemes for young people will be suspended.
The government said it was forced into difficult cuts by the "irresponsible planning" of its predecessors, but Labour accused the coalition of being ideologically driven to reduce the size of government and its involvement in stimulating the economy.
Danny Alexander, the chief secretary to the treasury, announced that £2bn worth of projects would be scrapped following a review of spending. They include the £80m loan to Sheffield Forgemasters, the £450m North Tees and Hartlepool hospital and the government's £25m contribution to a new Stonehenge visitor centre.
A further £8.5bn of projects are suspended including the libraries modernisation programme, the Sheffield retail quarter, a Department of Health funded wellbeing centre for Leeds and a new magistrates court for Birmingham. The bulk of the potential savings comes from nearly £7bn worth of defence ministry contracts for new search and rescue helicopters.
Alexander revealed that he had identified a £1bn black hole made up of Labour pledges that either depended on unspecified underspending in other areas of government or on drawing on government reserves.
"We have found another spending black hole in the previous government's plans – projects had been approved with no money in place to pay for them. I am determined to deal with this problem head-on and ensure we never see this kind of irresponsible financial planning in government again," Alexander said.
A review of the school rebuilding programme, which has effectively been frozen, will be revealed within days but Alexander described it as "heavily over-committed" and warned of tough decisions ahead.
Liam Byrne, the shadow chief secretary to the Treasury, said the projects amounted to 0.05% of government spending, "nailing the myth" that Labour had operated a "scorched earth" policy in the run-up to the election.
"Both the country and the Liberal Democrat party beyond will be aghast this afternoon at your attack on jobs, your attack on construction workers, your attack on the industries of the future and the cancellation of a hospital," he told Alexander.
"Let me ask you: what could be more front line than this? In five minutes this afternoon you have reversed three years of Liberal Democratic policy of which you were the principal author. What a moment of abject humiliation."
In total 217 projects worth £34bn were resubmitted for reapproval.
The £80m loan to Sheffield Forgemasters was agreed by the then business secretary Lord Mandelson.
Today the deputy prime minister, Nick Clegg, whose constituency is in Sheffield, said: "Sheffield Forgemasters is a great British company and as a Sheffield MP I regret that the government cannot afford to support its expansion.
"The truth is that this loan was promised by the outgoing Labour government as a calculated ploy to win support in Sheffield just ahead of the election, when they knew all along that there simply wasn't the money to keep to that pledge in the first place."
Union leaders have warned that withdrawing the loan would lead to thousands of job losses and jeopardise preparations to build a new generation of nuclear power stations.
The Unite leader Derek Simpson, who is from Sheffield, said the decision was a "colossal error of judgment", adding: "The company is unique, there is not another company in the world that has its skills and expertise."
Alexander announced an urgent review of spending commitments for 2010-2011, but the review will exclude those for military operations and the financial package agreed with the Northern Ireland executive to support the devolution of policing and justice powers.
Sourced from The Guardian
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